The Path to "Wealth" 發 and "Double Joy" 囍 Eight Contract Clauses That Will Help

Protect You in the PRC and the EU

Timothy A. Beastrom The Valspar Corporation Deputy General Counsel – Corporate Minneapolis, Minnesota

Ann Marie Hanrahan 3M Company Vice President and Associate General Counsel, Compliance and Business Conduct St. Paul, Minnesota

Peter Corne Dorsey & Whitney LLP (86-21) 6135-6188 corne.peter@dorsey.com Shanghai, China

Frances P. Doherty Dorsey & Whitney LLP +44 (0)20 7826-4517 doherty.frances@dorsey.com London, England

Paul B. Klaas Dorsey & Whitney LLP (612) 340-2817 Minneapolis, Minnesota +44 (0)20 7826-4567 London, England klaas.paul@dorsey.com

Contents

(available on www.dorsey.com)

1. PowerPoint

2. Eight Contract Clauses That Will Help Protect You in the PRC and the EU

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The Path to “Wealth” 發and “Double Joy” 囍

Eight Contract Clauses That Will Help Protect You in the PRC and the EU

Timothy A. BeastromDeputy General Counsel – Corporate

The Valspar Corporation

Ann Marie HanrahanVice President and Associate General Counsel,

Compliance and Business Conduct3M Company

Peter CorneFrances P. Doherty

Paul B. KlaasDorsey & Whitney LLP

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發 囍

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PERILS1. Acquisitions trumped by auctions2. Employees you can’t terminate3. Employees who leave and compete against you4. Withholdings that are too low or too high5. Contracts you can’t terminate6. Unethical conduct by suppliers, third parties7. Unethical conduct by employees8. “Home-towned” in foreign courts

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“HORSES FOR COURSES”

CONTRACT CLAUSES

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PERILAFTER YOU THOUGHT YOU’D

ACQUIRED A CHINESE COMPANY DEEMED TO BE A “STATE ASSET,”

IT CAN STILL BE AUCTIONED OFF TO THE HIGHEST BIDDER

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CONTRACT CLAUSEState-owned Assets

The Vendor shall be responsible for managing the State-owned Assets valuation and transfer process.

The Vendor shall use its best endeavors to obtain a valuation by a SASAC-recognised valuer in the PRC agreed upon by the Parties of the State-owned Assets and SASAC’s confirmation of the results of any such State-owned Asset valuation.

The Vendor shall use its best endeavors to ensure that the Transaction is not compromised or undermined by third parties who are not Qualified Bidders.

“Qualified Bidders” are then defined in a manner that is tailored to the client Purchaser (e.g. Qualified Bidder means an internationally renowned beverage company with a historical involvement in beverage industry exceeding 100 years)

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PERILAFTER YOU ACQUIRE A CHINESE OR

EUROPEAN COMPANY,

YOU MAY BE UNABLE TO TERMINATE EMPLOYEES YOU DO NOT WISH

TO KEEP

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CONTRACT CLAUSEThe Seller undertakes to the Purchaser to fully indemnify and hold the Purchaser harmless against all demands (including legal and other professional fees and expenses) which the Purchaser or any of such owners may suffer, sustain, incur pay or be put to arising from or in connection with: (i) any failure by the Seller to comply with its obligations under this clause; the employment of the Employees on the termination of their employment by the Seller on or before [Effective Date]; (iii) any failure by the Seller on or before the Effective Date to comply with its legal obligations in respect of any of the Employees; (iv) the transfer to the Purchaser, by virtue of TUPE, of the employment of any employee of the Seller other than the Employees; (v) any act or omission before which, by virtue of TUPE, is deemed to be an act or omission of the Purchaser; or (vi) the Seller’s failure to comply with its obligations under regulation 13 of TUPE.

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PERILAFTER YOU ACQUIRE A CHINESE OR

EUROPEAN COMPANY,

YOU MAY BE UNABLE TO PREVENT KEY EMPLOYEES FROM LEAVING AND

COMPETING AGAINST YOU

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CONTRACT CLAUSEIn order to protect the Confidential Information and business connections of the Company and each Group Company to which he has access as a result of the Employment, the Employee covenants with the Company (for itself and as trustee and agent for each Group Company) that he shall not:

(a) for [12/18/24] months after Termination, solicit or endeavour to entice away from the Company or any Group Company the business or custom of a Restricted Customer with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business;

(b) for [12/18/24] months after Termination in the course of any business concern which is in competition with any Restricted Business, offer to employ or engage or otherwise endeavour to entice away from the Company or any Group Company any Restricted Person;

(c) for [12/18/24] months after Termination, be involved in any Capacity with any business concern which is (or intends to be) in competition with any Restricted Business;

(d) for [12/18/24] months after Termination, be involved with the provision of goods or services to (or otherwise have any business dealings with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business; or

(e) at any time after Termination, represent himself as connected with the Company or any Group Company in any Capacity.

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CONTRACT CLAUSE(continued)None of the restrictions in clause ● shall prevent the Employee from:

(a) holding an investment by way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognised stock exchange; or

(b) being engaged or concerned in any business concern insofar as the Employee's duties or work shall relate solely to geographical areas where the business concern is not in competition with any Restricted Business; or

(c) being engaged or concerned in any business concern, provided that the Employee's duties or work shall relate solely to services or activities of a kind with which the Employee was not concerned to a material extent in the 12 months before Termination.

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CONTRACT CLAUSEPRC: Post-Employment Restrictions

In consideration of the Employee's performance of the obligations in [Clauses 1.1 and 1.2], the Company shall pay to the Employee non-compete compensation for the period of [12 months] following thetermination of the Employee’s employment. The amount of this monthly non-compete compensation shall equal [20%] of the Employee’s average monthly salary for the period of 12 months before the termination of the Employee’s employment. Such compensation shall be paid, less any deductions (where applicable), in monthly instalments at the end of each month throughout the said period, provided that the Employee has strictly complied with the terms of [Clauses 1.1 and 1.2].

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PERILYOU ACQUIRED A CHINESE OR

EUROPEAN COMPANY,

BUT YOU PROVIDED FOR TOO MUCH WITHHOLDINGS, OR TOO LITTLE

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CONTRACT CLAUSEPERSPECTIVE OF ACQUIRED COMPANYAll amounts payable under this Agreement shall be paid in full, free and clear of all withholdings or deductions on account of any taxes, duties, levies or charges, unless Buyer is required by law to make such deduction or withholding, in which case Buyer shall make the deduction or withholding from the relevant payment and shall paythe required amount to the relevant tax authority in a timely manner. Buyer shall promptly furnish Seller with an official tax certificate or other evidence of such deduction or withholding sufficient to enable it to re-claim such payment of taxes. The Parties shall co-operate to minimise any such withholding taxes to the extent permitted by applicable law.

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CONTRACT CLAUSEPERSPECTIVE OF ACQUIRING COMPANYThe Vendor acknowledges that the consideration payable by the Purchaser to the Vendor pursuant to this Agreement is inclusive of any and all applicable Taxes, including without limitation, those Taxes which the Purchaser may have an obligation to act as a withholding agent. The Purchaser reserves the right to withhold any amounts of Taxes asrequired under the relevant laws or regulations from the amountspayable by the Purchaser to the Vendor pursuant to this Agreement.

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PERIL

YOU ENTERED INTO A CONTRACT WITH A CHINESE OR EUROPEAN COMPANY

THAT YOU MAY NOT BE ABLE TO TERMINATE

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CONTRACT CLAUSEThis agreement shall commence [/when it is signed by all the parties and dated], and shall continue, unless terminated earlier in accordance with [termination clause], for an initial period of [12 months] (the “Initial Period”) and, thereafter, a party may terminate this agreement by giving to the other parties not less than [three months’] [written] notice to terminate, [such notice to be served no earlier than the date on which the Initial Period expires / such notice of termination to take effect no earlier than the date upon which the Initial Period ends] Other than as set out in this agreement, neither party shall have any further obligation to the other under this agreement following its termination.The following clauses shall continue to apply after the termination of this agreement: [clauses: e.g. clauses on (i) confidentiality; (ii) restrictive covenants; (iii) tax matters; (iv) costs; (v) notice; (vi) severance; and (vii) governing law)]Termination of this agreement, for any reason (or unless otherwise specified in this agreement), shall not affect the accrued rights, remedies, obligations or liabilities of the parties existing at termination.

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CONTRACT CLAUSE?IN THE PRC…

A statutory list of termination events (such as those set forth in the PRCContract Law and, for example, the Equity Joint Venture Regulations) apply whether or not you include them in the contract. By statute, a party may terminate a contract under PRC law if:– the other party states or acts as if it will not perform a major

obligation– the other party delays performing a major obligation, and, after

being asked to perform, fails to do so in a reasonable time– the other party delays performance, or otherwise makes it

impossible to realize the objectives of the contract

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CONTRACT CLAUSEIN THE PRC, IF THERE IS NO STATUTORY TERMINATION EVENT…For the purposes of [Article 1.2.2], a “Party A Termination Event” shall occur when:(unless waived by Party A) one or more of Party B and its relevant Associated Companies fails to execute and deliver in accordance with this Contract any Transaction Document to which it is a party;

--one or more of Party B and its relevant Associated Companies commits a material breach of one or more of the Transaction Documents to which it is a party, which material breach is not remedied within [20] Business Days after receipt of a notice from Party A or one or more of its relevant Associated Companies [or the EJV] requiring remedy; or

--Party B becomes bankrupt or insolvent or enters into or is subject to any analogous proceedings (whether voluntary or otherwise), ceases to carry on its business, or is unable to pay its debts as and when they fall due.

20Reprinted with permission

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PERILIF YOUR SUPPLIERS OR OTHER THIRD-

PARTY CONTRACTORS COMMIT BRIBERY OR BEHAVE UNETHICALLY,

IT MAY EXPOSE YOU TO PROSECUTION, CIVIL LIABILITY, OR

INJURY TO YOUR REPUTATION

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US FOREIGN CORRUPT PRACTICES ACT

UK BRIBERY ACT

PRC ANTI-UNFAIR COMPETITION LAW, as implemented by the Rules on

Commercial Bribery

…AND MANY OTHER COUNTRIES’STATUTES/RULES

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CONTRACT CLAUSEUK BRIBERY ACT 2010 (INTO FORCE 1 JULY 2011)

Far-reaching extra territorial effectsCriminal sanctionsTop-level responsibilityWeb of risks: acquired companies, agents/distributors

Anti-corruption policy requiredPublic statement by managementDue diligenceReporting responsibilities

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CONTRACT CLAUSE

ANTI-BRIBERY AND ETHICAL CONDUCT POLICY

(template excerpts in handout)

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PERILIF YOUR EMPLOYEES COMMIT BRIBERY

OR BEHAVE UNETHICALLY,

IT MAY EXPOSE YOU TO PROSECUTION, CIVIL LIABILITY, OR

INJURY TO YOUR REPUTATION

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CONTRACT CLAUSEThe Employee further undertakes that the Employee will not, under any circumstances, and at all relevant times, make, or cause or authorize any third party acting on the Employee’s behalf or on behalf of the Company to make, directly or indirectly, any prohibited bribes, offers, promises or payments of money, or anything of value, to any government official (including but not limited to PRC and foreign government officials, government employees, any political party or political party official, any candidate for political office, or any person otherwise acting in an official capacity) pursuant to all applicable laws (including but not limited to any PRC anti-bribery, anti-unfair competition and anti-corruption laws), or any other third party, for the purpose of influencing such party’s acts or decisions or in order to obtain or retain business or secure an unfair business advantage for either the Company or the Employee in performing the Employee’s duties and obligations pursuant to this [Employment Contract].

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PERILYOU CAN BE SUED IN A

FOREIGN COURT,

WHERE THERE THERE MAY BE EXCESSIVE DELAY,

EXTRAORDINARY EXPENSE, AND “HOME COURT ADVANTAGE”

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CONTRACT CLAUSE

INTERNATIONAL ARBITRATION

– “Klaas’s Clause” (in your handout)

– “Klaas’s Clause” is idiosyncratic (more detailed than the clauses recommended by international arbitral institutions and most practitioners)

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CONTRACT CLAUSELCIA “RECOMMENDED CLAUSE” (in its entirety)

Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity, or termination, shall be referred to and finally resolved by arbitration under the Rules of the LCIA, which Rules are deemed to be incorporated by reference to thisclause.The number of arbitrators shall be [one/three].The seat, or legal place, of arbitration shall be [City and/or Country].The language to be used in the arbitration shall be [ ].The governing law of the contract shall be the substantive law of [ ].

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CONTRACT CLAUSE

ICC RULES OF ARBITRATION

Article 20(1)

The Arbitral Tribunal shall proceed within as short a time as possible to establish the facts of the case by all appropriate means.

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CONTRACT CLAUSE• Who controls what’s most important?

• What’s most important?

– Language

– Arbitral rules, process, and deadlines

– Applicable law

– Seat

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THE PATH TO “WEALTH” 發 AND “DOUBLE JOY” 囍

EIGHT CONTRACT CLAUSES THAT WILL HELP PROTECT YOU IN THE PRC AND THE EU*

ACQUISITIONS TRUMPED BY AUCTIONS?

The Vendor shall be responsible for managing the State-owned Assets valuation and transfer process.

The Vendor shall use its best endeavors to obtain a valuation by a SASAC-recognised valuer in the PRC agreed upon by the Parties of the State-owned Assets and SASAC’s confirmation of the results of any such State-owned Asset valuation.

The Vendor shall use its best endeavors to ensure that the Transaction is not compromised or undermined by third parties who are not Qualified Bidders.

“Qualified Bidders” are then defined in a manner that is tailored to the client Purchaser (e.g. Qualified Bidder means an internationally renowned beverage company with a historical involvement in beverage industry exceeding 100 years)

EMPLOYEES YOU CAN’T TERMINATE?

The Seller undertakes to the Purchaser to fully indemnify and hold the Purchaser harmless against all demands (including legal and other professional fees and expenses) which the Purchaser or any of such owners may suffer, sustain, incur pay or be put to arising from or in connection with: (i) any failure by the Seller to comply with its obligations under this clause; the employment of the Employees on the termination of their employment by the Seller on or before [Effective Date]; (iii) any failure by the Seller on or before the Effective Date to comply with its legal obligations in respect of any of the Employees; (iv) the transfer to the Purchaser, by virtue of TUPE, of the employment of any employee of the Seller other than the Employees; (v) any act or omission before which, by virtue of TUPE, is deemed to be an act or omission of the Purchaser; or (vi) the Seller’s failure to comply with its obligations under regulation 13 of TUPE.

EMPLOYEES WHO LEAVE AND COMPETE AGAINST YOU?

EU

In order to protect the Confidential Information and business connections of the Company and each Group Company to which he has access as a result of the Employment, the Employee covenants with the Company (for itself and as trustee and agent for each Group Company) that he shall not:

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(a) for [12/18/24] months after Termination, solicit or endeavour to entice away from the Company or any Group Company the business or custom of a Restricted Customer with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business;

(b) for [12/18/24] months after Termination in the course of any business concern which is in competition with any Restricted Business, offer to employ or engage or otherwise endeavour to entice away from the Company or any Group Company any Restricted Person;

(c) for [12/18/24] months after Termination, be involved in any Capacity with any business concern which is (or intends to be) in competition with any Restricted Business;

(d) for [12/18/24] months after Termination, be involved with the provision of goods or services to (or otherwise have any business dealings with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business; or

(e) at any time after Termination, represent himself as connected with the Company or any Group Company in any Capacity.

None of the restrictions in clause ● shall prevent the Employee from:

(a) holding an investment by way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognised stock exchange; or

(b) being engaged or concerned in any business concern insofar as the Employee's duties or work shall relate solely to geographical areas where the business concern is not in competition with any Restricted Business; or

(c) being engaged or concerned in any business concern, provided that the Employee's duties or work shall relate solely to services or activities of a kind with which the Employee was not concerned to a material extent in the 12 months before Termination.

PRC

Post-Employment Restrictions

1.1 The Employee covenants with the Company (for itself and as trustee and agent for each and every other Associated or Subsidiary Company) that the Employee shall not, whether directly or indirectly, on the Employee's own behalf or on behalf of or in conjunction with any other person or entity for the period of [maximum 24 months] following the termination of the Employee's employment:

1.1.1 be engaged, concerned or interested in any business which is (or intends to be) in competition with the business of the Company (or any Associated or Subsidiary Company) in which the Employee was involved in the period of [12 months] before the termination of the Employee's employment;

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1.1.2 be engaged in or involved with the provision of goods or services to (or otherwise have any business dealings with) any person or entity who during [12 months] before the termination of the Employee's employment (i) was a customer of or had business dealings with the Company (or any Associated or Subsidiary Company) and (ii) the Employee had contact with during the course of his employment (the "Customer");

1.1.3 solicit or endeavor to entice away from the Company (or any Associated or Subsidiary Company) the business or custom of the Customer with a view to providing the Customer goods or services the same as or similar to goods and services which the Employee was responsible for, or had dealings or involvement in, during the period of [12 months] before the termination of the Employee's employment;

1.1.4 interfere or seek to interfere or take such steps as may interfere with the continuance of supplies to the Company or any Associated or Subsidiary Company (or the terms relating to such supply) from any supplier;

1.1.5 disclose to any person information which in the view of the Company is damaging to its reputation generally and specifically damaging to its reputation with any regulatory body, without prejudice to the Employee's rights of protected disclosure;

1.1.6 solicit or entice away, or endeavour to solicit or entice away, from the Company or any Associated or Subsidiary Company, any person employed by the Company or any Associated or Subsidiary Company, at the date on which the Employee's employment is terminated who had dealings with the Employee or for whom the Employee had management responsibilities in the [12 months] before the termination of the Employee's employment, with a view to inducing that person to leave such employment and act for another employer in the same or similar capacity n relation to the same or similar type of work.

1.2 Each of the restrictions in [Clause 1.1 above] are separate and severable and if any such restriction is determined to be unenforceable in whole or in part for any reason, such unenforceability shall not affect the enforceability of the remaining restrictions or, in the case of part of a restriction being unenforceable, the remainder of that restriction.

1.3 In consideration of the Employee's performance of the obligations in [Clauses 1.1 and 1.2], the Company shall pay to the Employee non-compete compensation for the period of [12 months] following the termination of the Employee’s employment. The amount of this monthly non-compete compensation shall equal [20%] of the Employee’s average monthly salary for the period of 12 months before the termination of the Employee’s employment. Such compensation shall be paid, less any deductions (where applicable), in monthly instalments at the end of each month throughout the said period, provided that the Employee has strictly complied with the terms of [Clauses 1.1 and 1.2].

1.4 The Company reserves the right to waive the restrictions on the Employee set forth in [Clauses 1.1. and 1.2] upon termination of the Employee’s employment or at any time during the [24 months] following termination of the Employee’s employment, by providing 1 month’s

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prior written notice to the Employee (the “Waiver Notice”). Any requirement for the Company to pay to the Employee compensation under [Clause 1.3] shall cease to exist from the second month following the date on which the Waiver Notice is issued.

1.5 If whilst employed by the Company the Employee applies for or is offered new employment, appointment or engagement, then before taking up such employment, appointment or engagement or entering into any related contract, the Employee will bring the terms of this Contract and in particular this clause to the attention or any third party proposing directly or indirectly to employ, appoint or engage the Employee.

WITHHOLDINGS THAT ARE TOO LOW OR TOO HIGH?

If you are the company being acquired…

All amounts payable under this Agreement shall be paid in full, free and clear of all withholdings or deductions on account of any taxes, duties, levies or charges, unless Buyer is required by law to make such deduction or withholding, in which case Buyer shall make the deduction or withholding from the relevant payment and shall pay the required amount to the relevant tax authority in a timely manner. Buyer shall promptly furnish Seller with an official tax certificate or other evidence of such deduction or withholding sufficient to enable it to re-claim such payment of taxes. The Parties shall co-operate to minimise any such withholding taxes to the extent permitted by applicable law.

If you are the acquiring company…

The Vendor acknowledges that the consideration payable by the Purchaser to the Vendor pursuant to this Agreement is inclusive of any and all applicable Taxes, including without limitation, those Taxes which the Purchaser may have an obligation to act as a withholding agent. The Purchaser reserves the right to withhold any amounts of Taxes as required under the relevant laws or regulations from the amounts payable by the Purchaser to the Vendor pursuant to this Agreement. The Vendor undertakes that it shall indemnify and hold harmless the Purchaser against any responsibilities, Liabilities, damages and expenses that the Purchaser may incur and any fines or penalties (except for those arising for reasons wholly attributable to the Purchaser) in whatever form that the tax authorities may impose upon the Purchaser in relation to the payment of consideration by the Purchaser to the Vendor pursuant to this Agreement, including fines on the Purchaser for failure to withhold any taxes as required by relevant laws and regulations.

CONTRACTS YOU CAN’T TERMINATE?

EU

This agreement shall commence [/when it is signed by all the parties and dated], and shall continue, unless terminated earlier in accordance with [termination clause], for an initial period of [12 months] (the “Initial Period”) and, thereafter, a party may terminate this agreement by giving to the other parties not less than [three months’] [written] notice to terminate, [such notice to be

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served no earlier than the date on which the Initial Period expires / such notice of termination to take effect no earlier than the date upon which the Initial Period ends]. Other than as set out in this agreement, neither party shall have any further obligation to the other under this agreement following its termination. The following clauses shall continue to apply after the termination of this agreement: [clauses: e.g. clauses on (i) confidentiality; (ii) restrictive covenants; (iii) tax matters; (iv) costs; (v) notice; (vi) severance; and (vii) governing law)]. Termination of this agreement, for any reason (or unless otherwise specified in this agreement), shall not affect the accrued rights, remedies, obligations or liabilities of the parties existing at termination.

PRC

Under PRC law, contracts (e.g. joint venture contracts) may have either a fixed term or an unlimited term. This has to be read in conjunction with other application legislation (e.g. the Sino-Foreign Equity Joint Venture Terms Tentative Provisions issued by MOFCOM (中外合资经营企业合营期限暂行规定) (1990) which provide that five categories of EJVs must have a fixed term namely:

(i) service trade EJVs such as hotel, apartment and office buildings, entertainment ventures, restaurants, taxi services, photo development centers operators and providers of machinery maintenance and consultancy services;

(ii) land development and real estate EJVs;

(iii) natural resource exploitation EJVs;

(iv) restricted category projects [under the Catalogue];

(v) EJVs in other sectors required to have a fixed term by law.

Also, the statutory list of termination events (such as those set forth in the PRC Contract Law and, for example, the Equity Joint Venture Regulations) will apply whether or not you include them in the contract. You need to consider whether there are any deal/matter- specific termination events that should be included in the contract.

1. TERMINATION

1.1 Termination upon Expiry of Joint Venture Term. Unless terminated earlier in accordance with its terms, this Contract shall terminate upon the expiry of the Joint Venture Term.

1.2 Unilateral Termination by Party A

1.2.1 For the purposes of [Article 1.2.2], a “Party A Termination Event” shall occur when:

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(i) (unless waived by Party A) one or more of Party B and its relevant Associated Companies fails to execute and deliver in accordance with this Contract any Transaction Document to which it is a party;

(ii) one or more of Party B and its relevant Associated Companies commits a material breach of one or more of the Transaction Documents to which it is a party, which material breach is not remedied within [20] Business Days after receipt of a notice from Party A or one or more of its relevant Associated Companies [or the EJV] requiring remedy; or

(iii) Party B becomes bankrupt or insolvent or enters into or is subject to any analogous proceedings (whether voluntary or otherwise), ceases to carry on its business, or is unable to pay its debts as and when they fall due.

1.2.2 Within [20] Business Days after the occurrence of a Party A Termination Event, without prejudice to the accrued rights and liabilities of the Parties, Party A may, by notice to Party B, terminate this Contract, liquidate the EJV and the provisions of [Liquidation/Dissolution Clause] shall apply.

1.3 Unilateral Termination by Party B

1.3.1 For the purposes of [Article 1.3.2], a “Party B Termination Event” shall occur when:

(i) (unless waived by Party B) one or more of Party A and its relevant Associated Companies fails to execute and deliver in accordance with this Contract any Transaction Document to which it is a party;

(ii) one or more of Party A, its relevant Associated Companies commits a material breach of one or more of the Transaction Documents to which it is a party, which material breach is not remedied within [20] Business Days after receipt of a notice from Party B or one or more of its relevant Associated Companies [or the EJV] requiring remedy;

(iii) one or more of Party A and its relevant Associated Companies fails to obtain any Permits necessary for the Business;

(iv) any step is taken by any person or Government Authority with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or any part of the assets of the EJV, or the assets used by the EJV in connection with the carrying on of its business;

(v) the Approval Authority conditions the granting of approval in relation to any Transaction Document on making changes to such Transaction Document which are not acceptable to Party B;

(vi) the business scope of the EJV that is approved by the Approval Authority and as set out in the Business Licence is materially different from that set out in this Contract and is unacceptable to Party B in the approved form;

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(vii) after the Establishment Date, any Government Authority requires any provision of one or more of the Transaction Documents to be revised or imposes conditions or restrictions on the implementation of one or more of the Transaction Documents;

(viii) any Government Authority promulgates a new PRC law, regulations or directive or a new interpretation or amendment of an existing PRC law, regulation or directive, and as a result Party B or any of its relevant Associated Companies is unable to derive the full benefit of any material term of one or more of the Transaction Documents;

(ix) one or more of Party A and its relevant Associated Companies party to a Transaction Document is declared bankrupt or has a liquidation committee appointed in relation to its assets or business, ceases to carry on its business, or is unable to pay its debts as and when they fall due; or

(x) a change of Control occurs in Party A.

1.3.2 Within [20] Business Days after the occurrence of a Party B Termination Event, without prejudice to the accrued rights and liabilities of the Parties, Party B may, by notice to Party A, terminate this Contract, liquidate the EJV and the provisions of [Liquidation/Dissolution Clause] shall apply.

1.4 Termination in Other Circumstances

1.4.1 This Contract may be terminated at any time by mutual agreement between the Parties.

1.4.2 If:

(i) a Force Majeure Event occurs;

(ii) as a result of the Force Majeure Event, the EJV is unable to operate effectively for a continuous period of [90 days] from the date on which the Force Majeure Event occurs; and

(iii) the Parties are unable to agree on how to mitigate the impact of the Force Majeure Event on the operations of the EJV in a manner acceptable to both Parties during such [90]-day period,

then either Party shall have the right to, by notice to the other Party within [20] Business Days after the expiry of the [90]-day period, terminate this Contract, liquidate the EJV and the provisions of Article 32 shall apply.

1.4.3 [If any of the following events occurs, unless the event in question occurred for any reason attributable to it or any of its Associated Companies, either Party may, by notice to the other Party within [20] Business Days after the date of occurrence of such event, terminate this Contract at no cost or penalty, and, if the EJV has been established by that time, liquidate the EJV and the provisions of [Liquidation/Dissolution Clause] shall apply:

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(i) the EJV fails to obtain the Permits set out in [●] on or before [●];

(ii) the EJV fails to obtain the Permits set out in Articles [●] on terms consistent with this Contract;

(iii) any Permit set out in Articles [●] has been issued subject to a condition or requirement which is, in the reasonable opinion of that Party, unacceptable to it;

(iv) there occurs a material adverse change in the PRC [nature of the EJV] industry, the PRC economy or the financial condition of the other Party or any of its relevant Associated Companies which is a party to a Transaction Document between the date of this Contract and the date on which the last Permit set out in Articles [●] is obtained by the EJV;

(v) [any step is taken by any person or Government Authority with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or any part of the assets of the EJV, or the assets used by the EJV in connection with the carrying on of its business;

(vi) any Government Authority requires any provision of one or more of the Transaction Documents to be revised or imposes conditions or restrictions on the implementation of one or more of the Transaction Documents; or

(vii) any Government Authority promulgates a new PRC law, regulation or directive or new interpretation or amendment of an existing PRC law, regulation or directive, and as a result, that Party or any of its Associated Companies is unable to derive the full benefit of any material term of one or more of the Transaction Documents.]

UNETHICAL CONDUCT BY SUPPLIERS, THIRD PARTIES?

ETHICS AND ANTI-BRIBERY POLICY CONTENTS

Section Contents Page A CEO’s Statement [1] B XXX Public Statement: Ethics and Anti-Bribery Policy [2] attached C Implementation of Anti-Bribery Policy [3] D General Prohibition on Improper Payments [3] E Hospitality, Gifts, Discounts and Political and Charitable Contributions [3] F XXX Group Agents and Risk Management [1] G Accounting and Record-Keeping: General Principles [3] H Conflicts of Interest [3] I Reporting and Investigation [3] [part confidential to board] J Review Procedure [3] K, L Forms [3] M Standard Terms of Business [1] attached

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B. PUBLIC STATEMENT FOR WEBSITE: ETHICS AND ANTI-BRIBERY POLICY

1. We are proud that we conduct business to the highest ethical standards. We make no exceptions to this. We take this approach not just because it is our policy to comply with the law in all our operations and in all the places where we conduct business, but because we believe that this is the right way to conduct business.

2. XXX and its group companies prohibit bribery by their directors, officers, employees, agents and all persons conducting business with or on behalf of the XXX Group, in any form and whether direct or indirect.

3. ‘Bribery’ includes the offer, promise or gift of a financial or other advantage to another person with the intention that the recipient should perform improperly any Relevant Activity or reward such improper performance. ‘Relevant Activity’ means any public functions; any activity connected with business; any activity performed in the course of a person’s employment; and any activity performed on behalf of a corporate or unincorporated body.

4. Anyone representing XXX or its subsidiaries (“the XXX Group”) has to commit to XXX that they will comply with these standards, which apply not just to employees but also to external people representing the XXX Group such as agents, consultants and temporary staff and to joint venture partners.

Relationships with others

5. We do not offer gifts or other advantages to customers’ employees or to officials.

6. We limit the entertainment we provide to entertainment that is reasonable, complies with local laws and does not provide the appearance of seeking to influence our guests improperly.

Conflicts of interest

7. No one representing the XXX Group is permitted to place him or herself in a position where their interests conflict or may conflict with those of XXX.

8. People representing the XXX Group are therefore not permitted to take any financial interest in a supplier of the XXX Group. They are not permitted to ask for or receive any personal advantage for themselves or their families from XXX Group suppliers and are required to declare gifts and entertainment from XXX Group suppliers.

9. A person representing the XXX Group wishing to take a position or interest in a company or organisation that competes with, or is a supplier to, the XXX Group may only do so with the permission of the XXX board of directors.

10. The XXX Group prohibits the receipt as well as the giving of bribes by anyone acting on behalf of the XXX Group. Gifts or entertainment offered to persons acting on behalf of the XXX Group may only be accepted in limited circumstances and must be recorded in accordance with [Ethics Director].

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Complying with the law

11. We require our representatives to comply with the laws of Guernsey, England, Cyprus, India, the USA and other countries in which we operate in all their dealings on our behalf or in connection with our business.

12. This requirement includes, in particular, compliance with the UK’s Bribery Act, the US Foreign Corrupt Practices Act and with applicable export controls.

13. Anti-corruption laws:

• Prohibit companies and individuals from giving or receiving bribes, improper payments and gifts to private and governmental organisations and their employees, as well as to politicians, political parties and charities; and

• Require businesses to keep accurate records of all transactions and transfers of assets and funds; and

• Require commercial organisations to have in place rigorous and effective policies against corruption.

This Policy requires that you comply strictly with these laws and with the XXX Group’s internal accounting controls.

14. Breach of this Policy is extremely serious. It will amount to gross misconduct and provide grounds for dismissal of employees and termination of dealings by XXX Group with agents.

Concerns

15. Any employee who is offered or has information concerning bribery must contact the [Ethics Director] immediately.

16. We encourage people who deal with us to raise with us any concerns they may have that those representing us may not be using the highest ethical standards in connection with our business. In the first instance we ask that issues are raised with the XXX Group person with whom you are dealing. If you do not wish to contact that person or are not satisfied with the response, please contact [Ethics Director] on [ ] or at [ ].

17. Reporting may be done anonymously.

. . .

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M. STANDARD TERMS OF BUSINESS

ANTI-CORRUPTION AGREEMENT SUPPLIERS

THIS AGREEMENT is made on ________________

BETWEEN:

(1) [Company name] (‘Company’) of [insert address]

AND (2) [Supplier] (‘Supplier’)

of [insert address]

IN CONSIDERATION of the Company entering into an Agreement with Supplier dated [date] for the supply to the Company of goods or services as identified in such Agreement (“the Supply Agreement”),

IT IS AGREED as follows:

A. Supplier’s Warranties and Undertakings

1. Supplier warrants and undertakes that it has read and understood the Company’s Ethics in Business Policy, a copy of which is appended to this Agreement at Schedule 1 (‘the Policy’).

2. Supplier further warrants and undertakes that:

(a) Supplier’s written responses to the Company’s due diligence enquiries are true and accurate in all material respects and not misleading;

(b) Supplier has disclosed to the Company its anti-bribery policies in force together with details of the Supplier’s reporting procedures and records of reports made to date pursuant to those reporting procedures that are or may be relevant to the provision of services to the Company;

(c) Supplier shall comply with the Policy in connection with all its dealings with, on behalf of or in connection the Company;

(d) in all its dealings with, on behalf of or in connection with the Company prior to the entry into force of this Agreement, it has not acted or omitted to act in a manner that would have constituted a breach of Section E of the Policy (‘General Prohibition on Improper Payments’).

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B. Reporting and Training

1. Supplier shall immediately report in writing to the Company any demand or request for a bribe to be paid by or on behalf of Supplier in connection with the Company’s business, including any demand or request for a facilitation payment.

2. Supplier shall provide training to all persons carrying out services in connection with the Company’s business so that such persons have an appropriate understanding of Supplier’s obligations to comply with the Policy and of how to resist requests and demands for bribes including facilitation payments.

C. Inspection of Records

1. Without prejudice to any other rights the Company may have, the Company shall be entitled to inspect, upon reasonable written notice such of Supplier’s financial and other records as may be necessary in order to assess compliance with this Agreement.

D. Indemnity

1. Without prejudice to any other remedies available to the Company, Supplier hereby agrees to indemnify the Company on demand against all costs and damages suffered or expended by the Company as a result of any breach by Supplier of the Policy or of any warranty or undertaking set out in this Agreement.

E. Termination

1. If the Company has reasonable suspicion that Supplier has not complied with the Policy or with any provision contained in sections [C, D and E] of this Agreement then

(a) Company shall provide written notice to Supplier of its suspicions;

(b) Supplier shall respond in writing within [2] working days;

(c) Company may then, without prejudice to any other remedies available to it, terminate this Agreement and the Supply Agreement by written notice to Supplier with immediate effect if Company continues to have reasonable suspicion that Supplier has not complied with the Policy or with any provision contained in sections [A, B and C] of this Agreement.

2. In the event of termination under clause 1 of this section, all obligations of the Company to Supplier under each terminated contract shall cease immediately.

F. Choice of law and jurisdiction

1. This Agreement shall be governed by and construed in accordance with the laws of England. Any disputes arising out of or in connection with this Agreement shall be subject to the exclusive jurisdiction of the English courts.

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For and on behalf of the Company Name: Position:

For and on behalf of the Supplier Name: Position:

UNETHICAL CONDUCT BY EMPLOYEES?

1.1 The Employee undertakes that at all relevant times, the Employee will comply with all applicable international, national, provincial and local laws, rules, and regulations, and the relevant policies and procedures of the Company (including but not limited to the policies and procedures set forth in the Company’s Employee Handbook).

1.2 The Employee further undertakes that the Employee will not, under any circumstances, and at all relevant times, make, or cause or authorize any third party acting on the Employee’s behalf or on behalf of the Company to make, directly or indirectly, any prohibited bribes, offers, promises or payments of money, or anything of value, to any government official (including but not limited to PRC and foreign government officials, government employees, any political party or political party official, any candidate for political office, or any person otherwise acting in an official capacity) pursuant to all applicable laws (including but not limited to any PRC anti-bribery, anti-unfair competition and anti-corruption laws), or any other third party, for the purpose of influencing such party’s acts or decisions or in order to obtain or retain business or secure an unfair business advantage for either the Company or the Employee in performing the Employee’s duties and obligations pursuant to this [Employment Contract].

1.3 The Employee acknowledges having attended the Company’s [and its Associated and/or Subsidiary Company’s ] mandatory Foreign Corrupt Practices Act (“FCPA”) and anti-bribery training seminar, and having read and understood the written FCPA and anti-bribery policies and procedures.

“HOME-TOWNED” IN FOREIGN COURTS?

International Commercial Arbitration Clause

Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity, or termination, shall be referred to and finally resolved by arbitration under the auspices of [sponsoring institution] in accordance with [that institution’s arbitral Rules or Procedures] to the extent those [Rules] [Procedures] are not inconsistent with the provisions of this paragraph.

[The parties to this contract agree to arbitrate between [among] themselves only; this clause does not permit, and the parties explicitly reject, class arbitration. Any attempt to involve other parties, whether similarly situated or not, in any arbitration under this contract is a violation of this contract and shall not be permitted.]

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The seat, or legal place, of arbitration shall be [Minneapolis, Minnesota, USA] [New York City, USA] [London, England].

The language to be used in the arbitral proceedings shall be English.

The governing law shall be the substantive law of [Minnesota, USA] [New York, USA] [England].

The number of arbitrators shall be [one,] [three, all] independent and neutral. [Within 10 days after commencement of the arbitration, each party shall select one person to act as arbitrator and the two selected shall select a third arbitrator within 10 days of their selection. The third arbitrator shall chair the proceedings.] Upon accepting appointment, each arbitrator shall agree to comply with and enforce this arbitration clause.

Within 30 days of commencement of the arbitration, the arbitral tribunal shall confer with the parties and issue a procedural order. The procedural order shall include a schedule for all proceedings through and including the hearing dates and the date by which the award will be issued.

Pleadings shall be closed within 90 days of commencement of the arbitration.

Each party shall attach to its pleadings a copy of all documents in its possession, custody, or control on which it will rely to support the allegations contained in the pleading. Within 30 days following close of pleadings, each party shall provide to the other party(ies) copies of all documents in its possession, custody, or control that are relevant to the issues raised by any claim or counterclaim but that were not attached to any pleading. [Within 30 days following the date upon document disclosure is completed, each party may take up to three depositions of up to seven hours each.] Disclosure disputes shall be resolved upon application to the chair of the arbitration panel; the chair's resolution shall be final.

To the extent not inconsistent with this paragraph, the 2010 International Bar Association Rules on the Taking of Evidence in International Commercial Arbitrations shall be applied.

Hearings shall be held on [four] contiguous dates within 180 days after the commencement of the arbitration, and the Award shall be issued within 225 days after the commencement of the arbitration.

It is the intent of the parties that these time limits be strictly enforced, but they may be extended by agreement of the parties, and failure to adhere to them shall not constitute a basis for challenging the award.

* All of the above clauses are generic – useful, we hope, as templates or “food for thought.” Your contract clauses will have to be adapted to your circumstances. We recommend that companies entering into contracts obtain legal advice. In offering these generic clauses, we are not intending to provide, and we are not providing, that legal advice.